Agency Defends Appointment

Of Whitewater Inquiry Chief

April 2, 1994|The New York Times

WASHINGTON — The Republican lawyer whose appointment to head part of the Whitewater investigation prompted cries of outrage from the White House got his job in part because the agency conducting the investigation was concerned about appearing too lenient, officials at the agency said on Friday.

The lawyer, Jay Stephens, is a former Republican prosecutor and critic of President Clinton.

Officials at the agency that hired him said they chose him to examine the Madison Guaranty Savings & Loan Association as a defensive maneuver. As one official put it, the agency, the Resolution Trust Corp., "bent over backwards" so it could not be viewed as being soft on the White House.

The appointment was sharply criticized by White House advisers, and Clinton suggested last week that it came about because the agency, which is the independent federal office charged with unraveling the savings and loans collapses of the 1980s, was under the control of Republican bureaucrats.

"Everybody who works there was appointed by a previous Republican administration," Clinton said in his news conference on March 24.

In fact, the appointment of Stephens was made by an agency committee and approved in February by the trust corporation's general counsel, Ellen B. Kulka, who had arrived there only a month earlier and had been selected by a Clinton appointee, Deputy Treasury Secretary Roger C. Altman.

Announcing her appointment on Dec. 23, Altman said, "Ellen is an exceptional attorney with a great deal of experience with laws pertaining to the thrift industry."

Senior White House officials have acknowledged that when they learned of the Stephens appointment in February they complained to the Treasury Department about it.

Prosecutors involved in the investigation of Clinton's investment in the Whitewater Development Co. in Arkansas have been taking testimony from senior administration officials before a federal grand jury to determine whether any laws were violated by the White House's complaining about Stephens.

Officials at the trust corporation, who would speak only on the condition of anonymity, said that Kulka and other officials were concerned that no matter what the agency concluded about Madison, it would be criticized either by Democrats or Republicans and that the only way to insulate it would be to pick someone with strong credentials that showed no ties to the White House.

Another federal regulator knowledgeable about the selection process said: "They were trying to find the safest firm they could get and avoid the appearance of somebody who was at all sympathetic to the White House. They bent over backwards to pick someone beyond reproach."